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Job Applicant Credit Reports

How to Protect Your Credit Report Rights

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Job Applicant Credit Reports

What's in your credit report can impact your job search.

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What's in your credit report and why is it relevant to employment? What's in your credit report can hamper your job search and it can be grounds for knocking you out of contention for a job. Especially when it comes to jobs where money and financial information is involved, bad credit can be an issue.

It's legal for employers to check credit.

Catalina Avalos, Esq., labor and employment attorney, Tripp Scott, says "A credit report check is allowed for employment purposes; i.e. hiring, promoting, reassigning, or retaining an employee." However, job seekers and employees do have rights when it comes to credit reports.

Here is what employees and job seekers need to know about credit reporting and how it impacts job hunting and employment. Here are tips on protecting yourself against credit reports checks by employers from Catalina Avalos.

How to Protect Your Credit Report Rights

General Credit History Information

  • Information from credit report must be used only for purposes requested.
  • Employee has the right to know if any adverse action was taken as a result of information on the credit report; (disclosure is required even if credit report information was not the main reason the applicant was turned down).
  • Disclosure does not have to be in writing but it is a good idea for an employer to keep record of written notification.
  • Employer must provide the employee with the name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency, if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the employee and,
  • Employer must provide a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken.
  • Employee has the right to contact the credit reporting agency providing the employee's credit report and attempt to correct any negative information.
  • Employee may re-apply for the job if negative information is corrected and there were no other grounds for being denied employment.

Credit Report Tips

  • Have an accurate and truthful resume.
  • Familiarize yourself with the information contained in your credit report.
  • Determine if there is any negative information in your credit report.
  • Attempt to correct the negative information in your credit report prior to seeking employment. Correcting negative entries can be time consuming and frustrating.
  • If an employer informs you that they will conduct a credit check, be prepared to decide between withdrawing your application for employment or pursuing the job.
  • If you are denied employment based on information on the credit report, speak to the employer to see if you may re-apply.

Credit Discrimination

  • Credit history checks may have the potential of having a disparate impact on minorities.
  • The Equal Employment Opportunity Commission (EEOC) can scrutinize employers, using credit history checks to disqualify prospective employees, in order to determine if the employer's practice is a facially neutral practice linked to job related criteria and/or is a business necessity.

Liability for the Employer

  • Employer who unlawfully uses information from an employee's credit report may be subject to criminal penalties.
  • Employer may also have exposure to civil penalties and liable for attorney's fees.

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